Abstract
This study utilizes the knowledge-attitude-practice (KAP) survey on Islamic banking
to identify the knowledge, attitude and practice of Islamic and conventional bank
account holders in Peshawar, Pakistan. The study attempts to identify whether a
relationship exists between the knowledge and practice of Islamic banking. This
study also tries to identify the motivating factors that affect the moderating variable
(attitude) and ascertains how attitude (positive, negative and neutral) affects the
relationship between the knowledge and practice of Islamic banking. For this
purpose, two hundred questionnaires each were distributed among Islamic and
conventional bank account holders in Peshawar. Data analysis revealed that a
significant relationship existed between the knowledge and practice of Islamic
banking. Furthermore, results indicated that most of the motivating factors were
equally valued by Islamic and conventional account holders but some were valued
more by Islamic bank holders. The study also found that a neutral attitude did not
affect the relationship between the knowledge and practice of Islamic banking.
However, a negative attitude dissuaded bank account customers from adopting
Islamic banking even if they had knowledge of Riba (interest), Hibah (gift), Wadiah
(safekeeping), Ijarah (lease, rent or wage), deposit products, investment products,
financing products (debt based), financing products (equity based), trade finance,
Takaful (Islamic Insurance), Musharakah (joint venture) and Bai Bithaman Ajil
(deferred payment sale). Furthermore, individuals who had a positive attitude were
more inclined towards practicing Islamic banking with respect to Shariah (Islamic
law), Riba, Takaful, Ijarah, Qard Hassan (interest free loan) and trade finance.
